Filing French Income Taxes & US Income Taxes

[Nadjezhda]

French Income Tax

Income tax is not deducted from your paycheck in France like it is in the US. (Only social security is deducted.) However, you will not make enough money to actually have to pay French income tax, but you should still file anyway.

You should have received the French equivalent of a W-2 (Déclaration Fiscale des Traitements et Salaires perçus au cours de l'Année 200X) in January for your earnings from the previous year. If you didn't receive one, you'll need to contact your rectorat and ask for it or you can look at your paystub for December and use the amount that is under "Montant Imposable de l'Année." You can view a scan of my first Déclaration Fiscale here.

If you are a renewing assistant, you will most likely make enough money to qualify for the prime pour l'emploi. You must earn 3,743 € in order to qualify for this, so first-year assistants will not be eligible. It is for those who were salarié or non-salarieé and have a low income, regardless of whether they worked full or part-time for the whole year or just part of the year.

The first time you file taxes in France, you cannot do it online, so either download the form from the impots.gouv.fr website or go to Centre des Impôts to pick up one. Filling out the déclaration des impôts is really simple. You basically write your personal info, the amount from the Déclaration Fiscale, fill out the prime pour l'emploi info (if applicable), sign it and return it (with a RIB, if necessary.)

For the prime pour l'emploi, you have two options: You can either check the box that says "travail à temps plein toute l'année" or you add up the number of hours you worked for the year and write it under "indiquez le nombre d'heures rémunérées dans l'année." But because the assistantship is considered full-time according to the rectorat, you should use 35 hours times the number of weeks you worked instead of 12. So if you had a 7 month contract, 7 x 4 x 35 = 980 or for a 9 month contract, 9 x 4 x 35 = 1260. Personally, my Centre des Impots told me to just check the box for toute l'annee even though I only had a 7 month contract, but other people have been told to do the number route, so I have no idea which one it should be.

Make sure to include a RIB with your tax form, or they will send a check but this usually takes a few extra weeks. Also remember to keep your bank account open long enough because you will receive the prime in late July or August.

You can try the simulator on the official website to see if you will qualify for the prime or how much it may be, if you estimate how much you will earn for 2008: http://www3.finances.gouv.fr/calcul_imp ... /index.htm

Taxe d'Habitation: This is not a part of income taxes, but it is a tax bill you may receive (possibly forwarded to your new address) in September/October. It will be for the apartment that you were living in on January 1st of that year. It doesn't matter if you did not live there the entire year, you still have to pay the tax for the entire year. If your name was not on the lease, then you will not receive this bill. However, some landlords may keep part of your security deposit to pay for it.

Officially, only certain "residences" are exempt from this tax, such as CROUS and other university housing. In some cases, you can get out of paying it if you prove that you are low-income by showing your tax return (another good reason to file even if you won't be getting the prime.) There's no guarantee that you won't have to pay it, but some assistants in the past have had success doing this.

The amount of this tax is dependent on several things (your income, the size & location of the apartment, etc.) so there's no way to tell how much it will be.

Redevance audivisuelle: This is basically a TV tax that is automatically added to the taxe d'habitation (around 120 €). If you do not own a TV and only watch TV channels on your computer (through Neuf or Free), then you currently do not have to pay this tax.

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US Income Tax

The US requires its citizens to pay income tax on all foreign income earned. You will need to change your French income to dollars using the exchange rate that was valid on the day you received it. If your American + French incomes equal more than $8,750, you will have to pay taxes. Even if your added incomes equal less than this, you might want to file anyway, because your risk of audit increases if you don't file a tax return.

From Cauldroness: Add your foreign income to whatever income you earned in the US, and put that number on Line 7 of the Form 1040. Attach a letter to your 1040 explaining you were an assistant in France. This is all you need to do. You only need the 1040; you do not need any other forms. Last year, I called the IRS's Foreign Income division and they confirmed this is exactly how it should be done. I also had my taxes checked by H&R Block's resident foreign income specialist, and he also confirmed this is exactly what should be done. I mailed my taxes in and got my refund right on schedule, no problems, no issues, it was beautiful.

Here is the letter I sent, if you want a template:

"To whom it may concern,

I am enclosing this letter with my federal tax return (Form 1040) to clarify certain points, if some confusion should arise.

You may note that on line 7, I report my income to be $######. However, I only provide a single W-2 from the _______________, Inc (FED ID ##-######) with an income of $#####.## in Box 1.

The additional $7556.48 is income I earned as an assistante de langue anglaise, an English Language Assistant, while working for the Ministère de l’éducation nationale, de l’enseignement supérieur et de la recherche, the Ministry of National Education, Advanced Instruction and Research in Evreux, France. If needed, I will provide my bulletins de paye, my monthly payment statements."

Foreign Income Earned Exclusion
If you lived outside of the US for a period of 330 days within 12 months AND you made less than $85,600, then you qualify for the Foreign Income Earned Exclusion and shouldn't have to pay income taxes to the US government. But because of the residency requirement, most assistants (first-time or renewing) do not qualify for this. Lecteurs/Lectrices can most likely take advantage of this exclusion though, using Form 2555EZ.

Chapter 4 of Publication 54 may help answer your questions: Tax Guide for U.S. Citizens and Resident Aliens Abroad

A Foreign Income Tax Credit also exists but because you won't make enough to pay income taxes in France, you can't deduct anything from your American income tax anyway. If for some reason you did pay income tax in France, then it does help prevent double taxation so you won't be paying income tax to two different governments on one income. Use Form 1116 for the tax credit.

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Corrections? Additions? Please help!

[Samantha.]

Technically, isn't more taken out of our paychecks than just the American equivalent of social security (ie. unemployment, healthcare, retirement, workers pensions, etc)? As an FYI, if you have to pay income tax (which assistants don't), if often amounts to roughly one month's salary.

And I thought the prime pour l'emploi was being phased out this year in favor of the RSA? As a side note, the prime pour l'emploi isn't automatic just because you only worked part-time. They take into account the number of hours worked, but also your pay rate. So if you worked part-time but were well-paid, there is a chance you won't be eligible.

As for the taxe d'hab - just because you are non-imposable doesn't automatically mean you don't have to pay it. The taxe d'hab serves several purposes. Part of it goes to your commune, part to the region & part to the state. Each of them gets to decide what income level pays (or doesn't pay) their portion. This also explains why the taxe d'hab can vary so much even from town to town.

[holldoll615]

2 questions:

1. is there a tax due date in france, like out april 15?

2. when filing in france (french taxes), do we add what we earned in the states that year?

[Nadjezhda]

Yeah, deadline in France is end of May if you use the paper forms; but sometime in June if you do it online. It's different for each zone: http://static.impots.gouv.fr/minisite/accueil2.htm#

I don't believe you need to claim your American income on French taxes.

[clendena]

So, last year I was an assistant in Lyon, and I moved to a different apartment in mid-December. I didn't ever change my address with my school, because at the time I didn't think it was necessary. They never sent me anything by mail, I received everything from my school at the school. So now I'm not sure what will happen with my taxe d'habitation since I wasn't living at the address my school had on January 1st. Now I'm living in Belgium, and I never gave my school a forwarding address, since they didn't ask me for anything. Where would I go or who would I contact in order to straighten this out, and what do you think I should do? Thank you!

[Kiwigirl]

I was quite late submitting my income tax (I'm not an assistant but in a strange situation as a PhD student... I'm a student sometimes and a salarie at other times... its been a confusing nightmare between the university, prefecture and my cds status!). I asked for extra help from the government and she did a quick calculation and said I should get quite a nice refund! I asked about then the taxe d'habitation because we received ours and it was a huge 750 euros!I do live in a very large 2 bedroom apartment in the very centre of the city which I share with a working flatmate. I asked the lady because I get a refund and don't earn much money then surely the taxe d'habitation should be a lot lower (I thought finally declaring my income tax might help to lower this as I'm not sure what income the tax d'habitation would have been calculated on before? some random ranking? or just my collocs?). She said that our combined income is still too high therefore there could be no reduction on the taxe d'habitation. I thought that my tiny income and the fact that I get a 500€ refund might have had some affect. My colloc has requested that we halve the bill, but is this really fair do you think?

[aehuff]

Ok, so I was only in France for 325 days in 2008 but I think I might qualify for the bona fide residence tests since my intentions have always been to stay in France and my trip home during the summer was to get a new visa, and all my stuff was still here. Do I need to include a letter or something, since in the instructions it talks about your "intentions" involved in defining bona fide residence? "Dear IRS, I live in France now, please don't make me pay taxes. Bisous"

I've looked at all the forms and since I had no income from the US in 2008, and I should be able to do the foreign income exclusion, my total income should be 0 dollars, thus no tax paid. Is this what other Americans have done in past years? Can you still exclude the income even if I end up paying no French taxes in May (because the low amount/prime de l'emploi)?

Still a few months to figure it all out, but just want to get it all straight so I don't end up paying thousands in late payment interest ten years from now.

[sole24]

Alors... let me get this straight... I don't qualify for either the bona fide resident or physical presence status as required by the 2555, so I'd just declare my French earnings for November and December on a regular 1040 (in dollars of course...)?

[aehuff]

You'd still need the 2555 since it's foreign income, you just won't get to exclude it.

EDIT: This is apparently wrong, see below.

[sole24]

gotcha... thanks

[nikkispramp]

You can call the IRS and tax person will answer your question. I call them about a tax question I had and they were really helpful even checked through for dedcutions for me so I was able to file my taxes and get my refund before the end of January!

[Cauldroness]

You'd still need the 2555 since it's foreign income, you just won't get to exclude it.

Incorrect, incorrect, incorrect! This has the potential to screw up your federal taxes. My father did this when he completed my taxes while I was living abroad, and it messed up my taxes very badly. We did not get my tax situation straightened out until AUGUST (4 months of being hounded by the IRS!!!), because my paperwork was so wrong, all because my dad had used the stupid 2555.

If you do not meet any of the tests for the 2555 (and it's likely you won't if it's your first year), then DO NOT FILL IT OUT.

Add your foreign income to whatever income you earned in the US, and put that number on Line 7 of the Form 1040. Attach a letter to your 1040 explaining you were an assistant in France. This is all you need to do. You only need the 1040; you do not need any other forms. Last year, I called the IRS's Foreign Income division and they confirmed this is exactly how it should be done. I also had my taxes checked by H&R Block's resident foreign income specialist, and he also confirmed this is exactly what should be done. I mailed my taxes in and got my refund right on schedule, no problems, no issues, it was beautiful.

Here is the letter I sent, if you want a template:

"To whom it may concern,

I am enclosing this letter with my federal tax return (Form 1040) to clarify certain points, if some confusion should arise.

You may note that on line 7, I report my income to be $######. However, I only provide a single W-2 from the _______________, Inc (FED ID ##-######) with an income of $#####.## in Box 1.

The additional $7556.48 is income I earned as an assistante de langue anglaise, an English Language Assistant, while working for the Ministère de l’éducation nationale, de l’enseignement supérieur et de la recherche, the Ministry of National Education, Advanced Instruction and Research in Evreux, France. If needed, I will provide my bulletins de paye, my monthly payment statements."

[sole24]

phewww... ok, thanks

[ktjo101]

But...
If we
1) earned more than $8,750 (total foreign + U.S.) in 2008, and
2) don't meet the requirements for the 2555

Then does that mean we will have to pay taxes in the U.S. on the income we report from France?

Cauldroness, what was the result of your filing the 1040 with the note??

Thanks.

[reste_encore]

But...
If we
1) earned more than $8,750 (total foreign + U.S.) in 2008, and
2) don't meet the requirements for the 2555

Then does that mean we will have to pay taxes in the U.S. on the income we report from France?

Cauldroness, what was the result of your filing the 1040 with the note??

Thanks.

My mom just went today and had her and my taxes done. I owe over $600 in taxes on my income in France (I'm a renewing assistant). Unfortunately, I don't meet the requirements for the 2555 and I made more than the minimum amount thanks to working in the US over the summer. Joy.